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The University of Wyoming has reached an unprecedented milestone.
The University of Wyoming Advanced Blockchain Laboratory (WABL) in the Department of Computer Science has not only minted its first block on the Cardano network—it’s minted 121 blocks and counting as of June 15, ramping up its services as Cardano stake pool operators.
“This is a great educational and research operation made possible by our academic research collaboration with IOG and their other research groups,” says Professor James Caldwell, co-director of Advanced Blockchain Laboratory. “One message I’d like to get out is, if you have any Ada cryptocurrency, please consider staking it with our stake pool (UWYO).”
The UW Department of Accounting and Finance is a partner in this success. While the lab established the Cardano staking node, the College of Business portfolio management class provided the initial pledge of capital and will be doing analytics on the stake pool parameters to try to optimize returns.
“The University of Wyoming Advanced Blockchain Laboratory has allowed students in different areas of studies to participate in an exciting and promising new area of finance,” says Pete Spriggs, UW student in the portfolio management class. “Our staking pool enables students to learn, research, and further develop the Cardano network. I believe there is a great opportunity not only to profit from staking in this pool but to further solidify the decentralization of the network. I am proud that the University of Wyoming has taken the initiative to be one of the first state institutions to operate a staking pool.”
The staking operation benefits UW not only through monetary returns but also by providing real-world experience for students and opportunities for researchers. In addition, it is furthering Wyoming’s participation in the digital economy.
UW students benefit from these operations. In the Computer Science department, students can learn about blockchain, systems administration, security, peer-to-peer networks, and modeling and simulation, among other things. In the Finance department, students learn about blockchain, digital market assets, the effect of parameters on market returns, and sustainability, among other things.
Researchers, too, can use information generated during staking operations to further theories of blockchain and cryptocurrency. These include analyzing and observing the behavior of the network, development of blockchain contracts, financial and economic analyses, the economic impact of decentralization, cost, risk, rate of return, and profitability.
Since 2017, Wyoming state leadership has been working to provide a comprehensive regulatory structure for blockchain, passing 24 laws that are attracting blockchain companies to the state. Legal frameworks and initiatives like these are vital for Wyoming’s future. The state is looking to diversify and as a result has become an international epicenter of innovation in blockchain and cryptocurrency—creating a favorable environment for the changing digital economy.
The Staking Pool
The University of Wyoming Advanced Blockchain Laboratory is based in the College of Engineering and Applied Science Department of Computer Science. The lab was founded in early 2020. It performs research and development focused on the real-world applications of blockchain—formal verification, smart contracts, and secure hardware, for example.
The lab is led by Dr. James Caldwell and Dr. Mike Borowczak, with six graduate students—three Ph.D. students and three master’s students, one of whom has graduated. Also working with the lab are visiting faculty member Dr. Hadi Shafei and an internationally known cryptographer Dr. Lisa Yin. Cryptographers focus on the foundational building blocks required to secure information systems—including the communication, storage, and underlying protocols that provide security in blockchain systems.
“WABL’s strength and success are rooted in actions that align within President Seidel’s 4 Pillars,” says Borowczak, the Loy and Edith Harris Assistant Professor of Computer Science. “While we were seeking to diversify our revenue streams, our entrepreneurial spirit enabled us to rapidly establish a stake pool by fostering interdisciplinary collaborations with members from other labs like CEDAR and faculty from other departments like Petroleum Engineering and Finance. In order to develop long-term sustainable impacts regionally here in Wyoming to the global blockchain space, we continue to include students and industry sponsors from all backgrounds, abilities, and perspectives.”
Ph.D. student Finley McIlwaine took the leadership of the stake pool node project and implemented it with assistance from Mason Johnson, a Ph.D. student in the CEDAR cyber-security lab. Finley and Mason implemented the secure stake pool operation on Amazon Web Services, a secure cloud services platform. Amazon Web Services, or AWS, undergirds much of the computer services you most likely use on a daily basis.
Finley produced documentation outlining the security measures taken in the implementation and a proposal, which prompted the initial pledge of $50,000 in Ada from the UW Foundation student-managed fund to start the stake pool. These funds are still in the pool, growing and earning returns of about 5% per year.
In early 2020, IO Global (IOG, formerly IOHK) supported UW with a $500,000 endowment in Ada cryptocurrency. Funds were doubled by state matching and augmented by UW funding, for $1.3 million in lab funding. This support created the lab.
IOG is the leading international technology company behind Cardano blockchain technology, which underlies Ada. IOG officially incorporated in Wyoming in 2018 and is actively supporting blockchain technology and workforce development at the university and in the state.
The UWYO stake pool received a boost in delegation on March 1, when IOG CEO Charles Hoskinson tweeted about the pool, “[UWYO] University of Wyoming stake pool. I like the sound of that.” Hoskinson is the founder of Cardano and a co-founder of Ethereum, a very popular early blockchain platform.
Hoskinson had previously noted that UW was “the first state institution in the entire United States to treat Ada like U.S. dollars.”
The UWYO stake pool received another boost in April. As part of a Cardano Foundation program to support new stake pools, the UWYO stake pool received a 15 million Ada stake for three months. In April, the pool had been around 2.5 million Ada of active stake, which meant the pool had started minting the occasional block.
The history of the UWYO stake pool can be viewed by going to https://adapools.org/ and searching for UWYO. A link is also available from the lab’s webpage at https://www.uwyo.edu/WABL.
What Is Cryptocurrency Staking?
UW produced its first block on the Cardano network at 10:58 p.m. on March 12, 2021.
Blockchain is a breakthrough in database technology for storing information. It is a secure distributed digital ledger for smart contracts and cryptocurrency. Because the ledger can be read by anyone and because previously made entries cannot be changed, it generates a kind of digital trust. This innovative technology is revolutionizing industries such as banking, law, identity, and chain of custody.
The UW staking operation is applications and hardware that maintain the network, while its stake pool is the money dedicated to that operation. Altogether, they’re called a node on the Cardano network. Cardano is the name of the blockchain, while Ada is the name of the cryptocurrency—named after Ada Lovelace, the first computer programmer. One Ada is currently worth approximately $1.50.
Cryptocurrency is increasingly mainstream, and a vital aspect of its infrastructure is maintaining the network. In the Bitcoin environment, operators called miners maintain the network, while in the Cardano environment, stake pool operators maintain the network. This is necessary for people to use the digital currency. It’s equivalent to what your bank does when you make a deposit or write a check—miners or stake pool operators perform the transaction and write it into the secure permanent financial record—although it takes minutes rather than days.
Cryptocurrency, however, doesn’t need a bank for security or legitimacy—it relies on networks of operators to create and confirm transactions by consensus. The complete immutable history of each blockchain is stored on multiple computers throughout the world, and anyone can see the record of transactions on any particular blockchain.
Ada is a proof-of-stake cryptocurrency—versus Bitcoin, which is proof-of-work. Cryptocurrency that is “mined” by proof-of-work needs ever-larger and -faster computers in a race to solve very large problems. The first to solve it wins some cryptocurrency for the services it provides.
However, proof-of-stake cryptocurrency like Ada is “staked” with a stake pool, and the rewards for the work of transactions are awarded to stake pool operators and delegators based on a number of criteria. The more funds in the node’s pool, the more likely it is to mint a block, up to a certain cap.
Other factors that influence the awarding of a block include how many blocks that pool has been awarded in the past, how much of their own cryptocurrency the owners have staked in the pool, whether they exceed a certain cap (which disincentivizes the monopolization of pools by a small number of operators), and how many people have delegated their cryptocurrency to that stake pool.
Stake pools are created by owners of Ada who pledge their cryptocurrency to a particular pool. In exchange for holding and not trading it, they earn on average 5% a year. In order to delegate Ada to the UWYO pool, the cryptocurrency must be held in a wallet such as Daedalus or Yorio.
Ada operates on time intervals called epochs, which are about 5 days. Every epoch, a snapshot of the distribution of Ada is created. This influences the stakes of subsequent pools and the chances that staking pool will mint blocks and thereby earn rewards.
Costs vary among pools. For the UWYO pool, costs include a fixed fee of 340 Ada every epoch taken from the gross rewards, plus a 1% margin of rewards back to the pool itself. This means that the majority of rewards go to delegators in proportion to their investment.
The University of Wyoming is not the only educational institution in the state that is mining cryptocurrency. Educator Jesse Smith at Shoshoni High School established the first Cardano node in the state—Crypto Bounty (BNTY1). He also established the Shoshoni Hackers Stake Pool Project that he is using to teach students about blockchain, stake pool operations, and cybersecurity. On the Cardano testnet, his students are currently running 22 Cardano nodes. He also shared information to help establish the UWYO stake pool.
These efforts are preparing the next generation of Wyoming’s digital workforce, as well as enticing future UW STEM students.
If you are interested in delegating Ada cryptocurrency to the UWYO node, contact James Caldwell, co-director of the Advanced Blockchain Laboratory, at email@example.com.